Gold ticks up slightly, but holds near 8-1/2 month low

SINGAPORE: Gold edged up slightly on Friday but concerns remained over a rate hike in the United States and a strengthening economy, keeping the metal firmly near its lowest in 8-1/2 months.

Gold came under selling pressure after the Federal Reserve indicated on Wednesday it could raise borrowing costs faster than expected when it starts moving, though it renewed its pledge to keep interest rates near zero for a "considerable time."

Any increase in rates would dim the appeal of non-interest-bearing assets such as bullion.

"It is hard to make a turnaround after the Fed news with the US economic data also strong," said one Singapore-based precious metals trader. "There are only minor supports now and the likelihood of falling to $1,200 are high."

Spot gold rose slightly to $1,227.80 an ounce by 0357 GMT. In the previous session, the metal fell to $1,216.01 - its lowest since early January - before recovering modestly to close up 0.2 percent.

Gold was also hurt after data showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting a sharp slowdown in job growth in August was an aberration.

Strong economic data would dim gold's appeal as a safe-haven asset.

Physical demand in Asia has picked up slightly with the lower prices, providing some support.

Meanwhile, investors were eyeing the results of Scotland's independence referendum to gauge the impact on the dollar, which was already trading near a four-year high against a basket of major currencies.

Sterling rose to a two-week high against the US dollar and two-year peak against the euro on Friday, taking comfort from early results of a Scottish referendum that showed the "no" camp in the lead.

"The impact of a 'yes' or 'no' vote is unlikely to have an equal effect on gold," HSBC analysts said in a note. "A 'yes' vote is likely to be more bullish for gold, than a 'no' vote is likely to be bearish. This is because of the investor uncertainty that a 'yes' vote could generate."

The prospect of breaking up the world's sixth-largest economy has investors worries about the geopolitical and financial implications.